HTC 2009 Annual Report Download - page 71

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Based on the Statement of Financial Accounting Standards No. 18 -
“Accounting for Pensions,” issued by the Accounting Research and
Development Foundation of the ROC, pension cost under a defined
benefit pension plan should be calculated by the actuarial method.
Related disclosure is as follows:
The Company’s net pension costs under the defined benefit plan in
2008 and 2009 were as follows:
2008 2009
NT$ NT$ US$(Note 3)
Service cost $ 5,194 $ 5,255 $ 164
Interest cost 8,699 9,351 293
Projected return on plan assets ( 9,967 ) ( 11,076 ) ( 346 )
Amortization of unrecognized net
transition obligation, net - --
Amortization of net pension
benefit 1,487 1,349 42
Net pension cost $ 5,413 $ 4,879 $ 153
The reconciliations between pension fund status and prepaid pension
cost as of December 31, 2008 and 2009 were as follows:
2008 2009
NT$ NT$ US$(Note 3)
Present actuarial value of
benefit obligation
Vested benefit obligation $ - $ 1,334 $ 42
Non-vested benefit
obligation 163,438 177,557 5,550
Accumulated benefit
obligation 163,438 178,891 5,592
Additional benefits on
future salaries 176,609 148,040 4,628
Projected benefit obligation 340,047 326,931 10,220
Fair value of plan assets ( 388,641 ) ( 416,688 ) ( 13,025 )
Funded status ( 48,594 ) ( 89,757 ) ( 2,805 )
Unrecognized pension loss ( 68,544 ) ( 47,896 ) ( 1,498 )
Prepaid pension cost $ ( 117,138 ) $ ( 137,653 ) $ ( 4,303 )
Assumptions used in actuarially determining the present value of the
projected benefit obligation were as follows:
2008 2009
Weighted-average discount rate 2.75% 2.00%
Assumed rate of increase in future compensation 4.00% 3.50%
Expected long-term rate of return on plan assets 2.75% 2.00%
The vested benefits as of December 31, 2008 and 2009 amounted to
NT$0 thousand and NT$1,511 thousand (US$47 thousand),
respectively.
19. STOCKHOLDERS’ EQUITY
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Capital Stock
The Company’s outstanding common stock as of January 1, 2008
amounted to NT$5,731,337 thousand, divided into 573,134 thousand
common shares at NT$10.00 par value. In June 2008, the
stockholders approved the transfer of retained earnings amounting to
NT$1,719,401 thousand and employee bonuses amounting to
NT$103,200 thousand to capital stock. As a result, the amount of the
Company’s outstanding common stock as of December 31, 2008
increased to NT$7,553,938 thousand, divided into 755,394 thousand
common shares at NT$10.00 par value.
In January and November 2009, the Company retired 10,000 thousand
treasury shares at NT$100,000 thousand (US$3,126 thousand) and
7,085 thousand treasury shares at NT$70,850 thousand (US$2,214
thousand), respectively. Also, in June 2009, the stockholders
approved the transfer of retained earnings amounting to NT$372,697
thousand (US$11,650 thousand) and employee bonuses amounting to
NT$133,573 thousand (US$4,175 thousand) to capital stock. As a
result, the amount of the Company’s outstanding common stock as of
December 31, 2009 increased to NT$7,889,358 thousand
(US$246,620 thousand), divided into 788,936 thousand common
shares at NT$10.00 (US$0.31) par value.
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In September 2009, the Company’s board of directors resolved to
donate to the HTC Education Foundation NT$300,000 thousand
(US$9,378 thousand), consisting of (a) the second and third floors of
Taipei’s R&D headquarters, with these two floors to be built at an
estimated cost of NT$217,800 thousand (US$6,808 thousand), and (b)
cash of NT$82,200 thousand (US$2,570 thousand). This donation
excludes the land, of which the ownership remains with the Company.
The difference between the estimated building donation and the actual
construction cost will be treated as an adjustment in the year when
the completed floors are actually turned over to the HTC Education
Foundation.
Services fees accrued were mainly from authorizing related parties to
do marketing activities and research and design and provide
consulting services.
17. OTHER CURRENT LIABILITIES
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Other current liabilities as of December 31, 2008 and 2009 were as
follows:
2008 2009
NT$ NT$ US$(Note 3)
Reserve for warranty expenses $ 5,225,862 $ 5,287,562 $ 165,288
Other payables (Note 25) 634,417 905,908 28,318
Agency receipts 255,853 576,891 18,033
Deferred credits - profit from
intercompany transactions 134,091 108,150 3,381
Advance receipts 120,504 195,678 6,117
Directors’ remuneration 21,842 --
Others 16,207 195,773 6,120
$ 6,408,776 $ 7,269,962 $ 227,257
The Company provides warranty service for one to two years
depending on the contract with our customers. The warranty liability
is estimated based on management’s evaluation of the products under
warranty and recognized as warranty liability.
Other payables were payables for investments accounted for by the
equity method, miscellaneous expenses of overseas sales offices,
repair materials and contingent loss of purchase orders which was
recognized as other loss.
In December 2008, the Company also estimated a contingent liability
of NT$125,663 thousand due to an increased financial risk from the
customer. If the customer cannot pay its payments, the upstream
firms might dun the Company for the customer’s liabilities. The
Company is still negotiating with the customer to resolve this issue.
Agency receipts were primarily employees’ income tax, insurance,
royalties, overseas value-added tax, and other items.
Deferred credits - gains on intercompany transactions were unrealized
profit from intercompany transactions.
18. PENSION PLAN
The Labor Pension Act (the “Act), which provides for a new defined
contribution plan, took effect on July 1, 2005. Employees covered by
the Labor Standards Law (the “Law”) before the enforcement of the
Act were allowed to choose to remain to be subject to the defined
benefit pension mechanism under the Law or to be subject instead to
the Act. Based on the Act, the rate of the Company’s required
monthly contributions to the employees’ individual pension accounts is
at least 6% of monthly wages and salaries, and these contributions are
recognized as pension expense in the income statement. The
pension fund contributions for the years ended December 31, 2008
and 2009 were NT$158,050 thousand and NT$182,271 thousand
(US$5,698 thousand), respectively.
Under the Law, which provides for a defined benefit pension plan,
retirement payments should be made according to the years of
service, with a payment of two units for each year of service but only
one unit per year after the 15th year; however, total units should not
exceed 45. The rate of the Company’s contributions to a pension
fund was 2% after the Act took effect. The pension fund is deposited
in the Bank of Taiwan in the committee’s name. The pension fund
balances were NT$388,641 thousand and NT$416,688 thousand
(US$13,025 thousand) as of December 31, 2008 and 2009,
respectively.
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